For Make in India, we need `Mine in India': Anil Agarwal, Vedanta

Resources and infra are two areas where we need investment. We are dependent on imports, which amount to $600 b. We need to simplify investment regime to get large investments.Rakhi Mazumdar&Satish John | ET Bureau | November 19, 2015, 07:28 IST

Anil Agarwal, chairman of diversified resources major Vedanta Resources, still retains enough gumption to invest big in India, in spite of the searing slump in commodities and hurdles in getting regulatory approvals for mining. His Lanjigarh refinery in Odisha is working at a quarter of its production capacity and Chinese aluminium is killing the industry. However, he insists that his company is better placed as it figures in the first quartile of production costs. He mentions a "few pinpricks", such as the delay in obtaining clearances and on retrospective taxes, and argues that "For Make in India, we need to facilitate `Find in India' and `Mine in India.' In spite of the obstacles, his group is lining up Rs 20,500 crore of investments in Rajasthan in the next 3-5 years. Agarwal spoke to Rakhi Mazumdar and Satish John in a conference call from London, a day after he attended a meeting that top global CEOs had with Prime Minister Narendra Modi during his visit to the UK. Edited excerpts:

How did the meeting fare with the PM?

By and large Britain had done everything possible to welcome the PM. On both sides it was a huge delegation. It has been taken very well. While there were a few pinpricks like the retrospective tax, delay in getting clearances etc. they welcomed opening up of FDI in various sectors.The British PM, David Cameron, was around all the time while the PM Modi was in London. India's reassurance on retrospective tax was well received.What is needed to boost FDI was also discussed. Vedanta has made the highest FDI in India -$30 billion in 10 years -while on India's side, the Tatas are the largest investor and employer in the UK.

You mentioned recently that the government should be nimbler and faster in decision-making. Can you elaborate?

Two things come to mind. We are a resource-based country. Resources and infrastructure are the two areas where we need investment. We are dependent on imports, which amount to around $600 billion. In today's world, technology and capital is available. We need to simplify our investment regime to get large investments. India needs 10 companies like Vedanta in resources, oil & gas, iron ore, gold, etc. The new MMDR Act is geared towards that. All we need is to have revenue sharing and a policy of self-certification with heavy penalty in case of any wrongdoing. We have to compare ourselves with China. We consume only 10 per cent of what they do with a similar population size. That indicates the kind of growth potential that exists in India when we open up.For Make in India, we need to have `Find in India' and `Mine in India'.Mining is the biggest employer in the long term. Similarly, with the kind of infrastructure we have to build, there is huge employment generation that is possible. A country of 1.25 billion people needs to develop its own resources and infrastructure. Look at oil and gas. We do not have global majors like Shell, ExxonMobil, or a Total here. But they are present in Myanmar. While many buildings are coming up, we do not have proper sewerage, highways, roads, or enough electricity.

How has the downturn in commodity markets impacted resource majors like the Vedanta Group? Can you share details about issues being faced in businesses like aluminium, zinc and oil & gas?

Prices have fallen in the downturn.However, we are in the first quartile of the cost of production curve. Also, we are in the process of reducing our cost of production further. We are India-based, where consumption is good; we have a balanced portfolio with aluminium, copper, zinc, iron ore and oil & gas.

I will go one by one. Aluminium is a natural product for India, given our large reserves of bauxite and coal. We should be able to be the lowest cost producer of aluminium. That can create jobs and remove poverty. We should focus on developing `semis' under Make in India since processing of aluminium can give rise to hundreds of industries. For example, around 500 kg of aluminium goes into each car, in components like die castings, radiators, etc. Aluminium can boost Make in India in a big way.We have a large 3 million tonne (mt) capacity in aluminium in India, which we are operating at 40 per cent capacity now. We are looking at getting bauxite to raise capacity utilisation. n zinc and lead and silver, in which we are one of largest producers at Hindustan Zinc, we raised capacity more than 10-fold in the last 12-13 years from 1.5 lakh tonne. In Goa, iron ore mining resumed after a hree-and-half-year shutdown. Two hings are hurting us. Prices have fallen to such an extent. We also expect the government to abolish the 10 per cent tax on exports of low-grade ore.The government should provide more room for exploration. A liberal exploration policy will also generate self-employment. We need ten times more than what we are doing today.

When do you see commodity cycles changing course for a recovery in prices?

While in (case of) iron and oil, prices may come up by 15-20 per cent. However, it s likely to remain at that level.

There have been very few greenfield projects that are coming up in India. Why are industrialists hesitating from investing in greenfield projects (like Lanjigarh)? What will give them confidence?

it is true that industry today has less courage for new sites. The interest rates are very high and that makes projects unviable. I don't know the answer. The trend is nobody has the mood or the zeal to start a new nvestment. After all, the existing one has to run healthily. However, it is a question of time. Large capacities have o come up in every sector, government has to get it either hrough public, private or investment by multinational companies.